Darling launches tax charm offensive

Alistair Darling launched an attempt to rebuild his fractured relationship with business in a speech hinting at more tax concessions and a new industrial policy.

Charming: 'Business will be core'

Following months of damaging rows with bosses, the Chancellor vowed to mend relations by putting companies 'at the heart of our economic agenda'.

He promised to work closely with a new forum to ensure controversial proposals to tax firms' foreign profits don't drive them abroad.

With a strong hint of mea culpa following policy U-turns, Darling said: 'Getting business tax right is not easy.'

He told the Confederation of British Industry: 'Tax rates have to be globally competitive. I am determined that British business will not be the fiscal fall guy. Business is the lynchpin of the British economy.'

Shadow Chancellor George Osborne will today call for a fullscale climbdown over the offshore tax fiasco, claiming £160m of corporation tax revenues could be lost as at least six firms consider leaving the UK.

Drug company Shire and United Business Media are among the companies that have said they are moving abroad to take advantage of better tax rates, while media giant WPP is considering its options.

Darling left the way open for a reversal over foreign profit taxes, saying 'any changes to the rules will be taken forward in close consultation with businesses'.

He also said the Treasury needs a 'new approach' to supporting 'thriving' industries and bolstering newer firms.

This suggests he wants to build on policies such as research tax credits in order to support world-class UK firms.

The Treasury has taken a heavily laissez-faire approach to industrial policy. But with foreign governments overtly building up 'industrial champions', this is under question.

Industrialists such as Sir John Rose, boss of aero engine maker Rolls-Royce, have attacked the Treasury for doing little to support top-flight manufacturers.

Darling also called for oilproducing nations to bolster output as the price of crude hit record levels of above $129 in New York. And he hinted that the Bank of England has scope to cut rates, arguing that despite current risks inflation and growth will slow in the 'longer term'.